Now-defunct lender Homepoint is suing seven correspondent mortgage lenders, claiming they breached an agreement by either failing to cure the loan defects or repurchase the loan as required under the terms of the correspondent agreement.
Homepoint was forced to repurchase 10 separate loans that didn’t conform to the GSE guidelines for delinquencies and misrepresentations from secondary market investors including Fannie Mae and Freddie Mac, according to suits filed between January and June 2023 in the U.S. District Court for the Eastern District of Michigan.
The correspondent lenders – AHL Funding; AmRes; Continental Mortgage Bankers; Fidelity Direct Mortgage; Lending 3; Loan Factory and Trans United Financial Services – allegedly owe Homepoint more than $4.6 million, excluding interest and attorneys’ fees.
The lenders, excluding Trans United, are accused of failing to repurchase the six-figure loans. In regard to Trans United, Homepoint is seeking a combined $1.7 million across three loans it says it purchased for properties in California.
According to the complaints, Homepoint sent notice of the repurchase obligation and demanded that lenders cure the loan defects or repurchase the loan as required under the terms of the correspondent agreement.
Despite Homepoint’s notice and demand, the lawsuits allege that the lenders failed to cure the loan defects or repurchase the loans as required under the agreement, according to the complaints.
Attorneys representing Homepoint and the lenders that were sued did not respond to requests for comment.
A court clerk entered a default judgment for failure to plead or otherwise defend for AHL Funding and Lending 3, ruling in favor of Homepoint in the amount of $752,401 for AHL Funding and $523,630 for Lending 3.
Following a myriad of challenges — including low capital levels, underwriting issues and technical problems with its loan origination system, Home Point Capital announced in April that it would sell its wholesale origination business to The Loan Store.
Homepoint was previously the third largest wholesale lender in the country, followed by United Wholesale Mortgage (UWM) and Rocket Mortgage, according to Inside Mortgage Finance.
In May, Home Point Capital announced it was selling the company to Mr. Cooper Group for $324 million in cash.
